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Real Estate Matters | Can we predict what will happen to Macau’s property market in 2019?

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Friday, January 25, 2019 - 4 weeks ago No Comments 1,395 Views

Sam Lee

Sam Lee is a marketing manager and property consultant at JML Property.JML was established in 1994 and offers Investment Property & Homes. It specializes in managing properties for owners and investors, and providing attractive and comfortable homes for tenants.

Those intent on peering into the Macau market’s future often try their luck by looking next door to Hong Kong. Macau’s market has tended to track Hong Kong’s with a lag, both in terms of price trends and policy changes. Although there are notable differences in demographics and economics, money moves a lot faster in Hong Kong’s property market and the market sentiments in Hong Kong tend to spill over into Macau.

Hong Kong’s market has come off of a longstanding bull-rally late 2018 and analysts predict a strong correction in prices in 2019. Both prices and transaction volumes have fallen since December 2018. Is this what is in store for Macau?

Whatever happens in Hong Kong it will no doubt impact Macau, but it’s far from certain that the same thing will happen here.

Firstly, Macau’s property market is not as ‘frothy’ with speculation as the Hong Kong market. Also, hoarding of empty flats by developers is not a big factor in Macau, so the government introducing a ‘vacancy tax’, in the unlikely event that they decide to do so at all, will not have the same incentive for developers to slash prices and offload their stock quickly.

Over the last fifteen years, Macau’s property market has definitely been on a journey. Some describe the journey has ‘profitable’. Others might describe it as ‘absurd’. No matter how you see it, there is one word that cannot be used to describe what has happened – predictable.

One of my favourite authors, a Lebanese-American academic named Nassim Nicholas Taleb often talks about “Black Swans”. A Black Swan Event is a random and unexpected event that has a massive impact. Looking back at the last 20 years, we can recognise that the events that have had an impact on the market were mostly things that could not have been reasonably foreseen. SARS. 2008. Beijing’s random fits of VISA policy regulations and money laundering crackdowns. Trump. The trade-war. Macau potentially earning the status of the ‘richest place on the planet’ with the highest GDP per capita by 2020. If we could have foreseen any of these events with any certainty in year 2000, we would all have much fatter wallets by now.

Many have ‘predicted’ that the opening of the HZMB will massively boost property prices in both Hong Kong and Macau. The bridge has been operational for a couple of months now, and although we are yet to see the long-term effects, the market has generally greeted the grand opening with crickets.

So here is my humble opinion for anyone trying to predict where Macau’s property market is going to go – don’t even try!